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Stanford Report, June 2, 2004

BP chief: Open markets ease poverty

BY MARGUERITE RIGOGLIOSO

"Poverty is not inevitable," John Browne, group chief executive of the energy giant BP, said during a talk he gave May 19 at the Global Business and Global Poverty Conference at the Graduate School of Business. Business, government and global institutions, he said, are proving that through their combined efforts, "change for the better is within our grasp."

Browne cited statistics to show that the dismantling of trade barriers and the opening of markets have helped raise the economic status of the entire world. Living standards rose more than twice as fast in the second half of the 20th century than they did in the first, he said, because from 1950 to 2000 world trade grew "by a remarkable 1,700 percent." Open markets also have led to the spread of knowledge and best practice, improved environmental conditions, better health and enhanced human rights, he said. "The case which links globalization and progress is pretty strong."

Browne acknowledged the "dark sides to globalization": terrorism, the traumatic disruption of established patterns of economic activity, governmental and corporate corruption, and a sense of public unrest and unfulfilled expectations. Corporations can maintain globalization as a positive force, he said, if they take a direct interest in the health and stability of the places in which they operate.

Drawing on a historical example close to home, Browne observed that Stanford University's founder, businessman Leland Stanford, proved how simply providing educational opportunity to an impoverished area could turn it around economically. "[Stanford] wanted to create an institution at a time when this part of California was one of the poorest and most disadvantaged areas of the United States," said the Cambridge-educated physicist, who is also a graduate of the Business School's Sloan Management Program. Stanford "certainly succeeded, and in doing so demonstrated what a sustained commitment to education can achieve."

Browne spoke as part of a conference organized by the school's Center for Global Business and the Economy. BP is one of the founding donors to the center. A 25-year veteran of BP, Browne recently was named most admired CEO by the British business monthly Management Today.

Business can help improve the quality of life around the world, he said, by bringing investment, jobs and educational opportunities to communities in which global companies work. Business also can contribute by protecting local environments.

"The greatest enemy of the environment is not development but poverty itself," Browne said, adding that the struggle of people living at subsistence levels can lead to great habitat damage. "Development and investment gives people more and better choices," he said. "Technology and the spread of global best practice can protect land and water supplies and improve the fuel mix ­ reducing dependence on coal and wood, containing the uncontrolled use of land, and giving people the opportunity to use resources in ways which are sustainable."

Another imperative for sustainable success, observed Browne, is that companies remain "transparent" ­ that they declare publicly what they are paying to governments and workers, eliminate bribery and facilitation payments, and avoid involvement in politics and partisan issues. Globalization, he said, should not be "a new form of colonialism in which a tiny, self-perpetuating elite grow rich at the expense of everyone else."

Browne included a plea for the continued elimination of protectionism around the world. "In many of the places where poverty is at its worst, business can't operate," he said. "Markets are closed or biased against their competition. Investment and profits are restricted or banned altogether. I believe there is a strong and direct correlation between the successful open activity of business and rising living standards."

Governments, private firms and international institutions such as the World Bank and the World Trade Organization must coordinate their efforts to develop local talent and infrastructure, establish international standards and resist corruption, Browne maintained. He pointed to proposals made by British Chancellor of the Exchequer Gordon Brown, designed to support investment in education and health care and link the distribution of funds to the country's transparency and governance, as exemplars that leaders and organizations internationally can draw upon in their own efforts.

Browne enthusiastically endorsed the Business School's new Center for Global Business and the Economy as an enormously important effort in the worldwide struggle against poverty. "There is no excuse for fatalism," he said.

 

Marguerite Rigoglioso is a Bay Area freelance writer.